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CWXZF Update
Well that was fast.
On February 23th I wrote a long analysis of CWXZF, concluding that stonk go up. At the time, it was trading at $6.16. Since then, I’ve told friends who want a quick win to $8 per share US, or March 30, whichever comes first. For the time being, stonk go up, hitting $8 this morning. That is a 30% bump in under a month.
This means Canwel is now a momentum stock. People are buying it not because it has solid fundamentals (though at $8/share, I think it does) but because other people have bought it and made profit. As such, the momentum will probably continue until it is over-valued. At that point he early adopters will take their profits, the stock will drop, and the people who came in late will be left holding the bag. One term for the unsophisticated, late adopters who chase profits, only coming in after years of growth, because the stock is “safe” are the greater fools, a term I may need to expand on in another post.
I don’t think of stocks that have experienced growth as safe. Instead, quite the opposite, I think of them like a spring, with a natural state (the intrinsic value of the stock), and a current sale price. If the stock has had years of price-growth unmatched by profitability growth, the spring is extended; it wants to snap back. If the company is under-valued, perhaps just because of a single bad news cycle, it is compressed. For example…
